Convicts claim 'tax credits' on jail wages

Convicts are earning up to £11,000 a year for prison work - then having it topped up with £1,300 in Government tax credits.

The lucky inmates at Coldingley Prison are being paid £5.35 an hour for a full working week behind bars, designing leaflets and flyers.

And, because they are earning enough to pay tax, they are then entitled to tax credits from the Treasury.

This is despite having no outgoings, with the taxpayer picking up the £37,000-a-year bill for keeping them in jail. In a single year, they can rake in almost £12,500.

Critics last night described the payment of the tax credits as a disgrace, which they blamed on Treasury incompetence. It was only discovered after a whistleblower contacted the Daily Mail.

Ministers had previously insisted no tax credit payments were made for work carried out inside jail.

The £11,000 annual 'salary' is being funded by the prison charity, the Howard League for Penal Reform.

It is part of a pilot being carried out at the Surrey jail, which houses life sentence prisoners guilty of some of the most heinous crimes, to assess the benefits of paying inmates the minimum wage.

It is intended to change the attitude among criminals that they will never earn money much money legally, and 'crime pays better'.

But Government officials failed to realise that allowing the project to take place would open the door to the lucrative tax credits, worth £1,300 a year.

The taxpayer-funded handout is supposedly to help people on low wages with their living costs.

Shadow Home Secretary David Davis said: 'It is disgraceful that Treasury incompetence means hard-earned taxpayer's cash is actually going to offenders who are still serving custodial sentences.'

Blair Gibbs of the TaxPayers' Alliance said: 'Serving prisoners should not - under any circumstances - be receiving taxpayer-funded benefits. If this is an oversight, it should be stopped immediately and the money paid back.

'If it isn’t, the Government should explain why they are paying benefits to convicted criminals who are already being kept warm and fed by the taxpayer, when so many ordinary families struggling to makes ends meet are getting hammered by rising taxes and energy bills.'

The prisoners at Coldingley work at a design studio, completing a full working day.

They design and print leaflets, mostly for the voluntary sector. The money raised is used by the Howard League to pay their wages.

The prisoners are free to spend the money however and whenever they choose, provided it does not break prison rules. The cash could also be sent straight to family members.

Their wages are a huge increase on normal prison work, which earns inmates between £7 and £12 a week.

Last month, it emerged prisoners at Kirklevington Grange prison, in Cleveland, were earning tax credits.

But these inmates were at least leaving the prison to do their work, which consisted of regular full-time jobs in preparation for their impending release from jail.

At the time, Her Majesty's Revenue and Customs insisted that no inmates were receiving payment for work inside jails, but has now been forced to admit this was wrong.

Officials said that, it was only after being contacted by the Daily Mail, they discovered the payments.

A spokesman for Her Majesty's Revenue and Customs said: 'We keep all aspects of the tax credit system under review.

'Where there is evidence of abuse or the system not meeting the objectives we have set for

it, we will not hesitate to act to ensure the system properly reflects the government's intentions.'